Reviewing a policy you already have

This is the least glamorous thing on this website and probably the most useful. It costs nothing, I don't get paid for it, and it's where I find the most avoidable problems.

Go and find them

Physical policies, statements from the insurer, anything through work, anything bought decades ago by a parent. Then for each one, answer six questions.

1. Is it term or permanent — and if term, when does it end?

This is the one that hurts.

A twenty-year term bought at 45 ends at 65. Many policies then continue at a dramatically higher annual price, and people either pay it without realising why it jumped or let it lapse without realising what they lost. If you're within a few years of a term ending, you have options. After it ends, you have fewer.

Find the end date. Write it on a calendar.

2. Who is the beneficiary?

Then check it against who you'd choose today.

Beneficiary designations override your will. An ex-spouse named in 1998 and never updated will receive the money regardless of what any other document says. This is the single most common thing I find that needs fixing, and it takes one form to correct.

Check the contingent beneficiary too — that's who receives it if the first person has died. It's frequently blank.

3. Is it through work?

If so, assume it ends when the job does. Most group coverage does.

That's fine while you're employed, but it means it isn't part of your long-term plan. If you're approaching retirement and your only coverage is through work, you'll want to know what happens on your last day before your last day.

4. If it's permanent, what's it actually doing?

Whole life and universal life policies have moving parts. Cash value builds, loans can be taken against it, and on some policies costs are deducted from the value as you age.

Two things worth asking the insurer directly:

• Is it on track to stay in force, at the current funding, for as long as you need it?
• Have any loans been taken against it, and what does that do to what it pays out?

A universal life policy can quietly become underfunded and require more money later than the original illustration suggested. Requesting an in-force illustration from the company shows where it actually stands — not where it was projected to stand when it was sold. It's free, and you're entitled to it.

5. Does the amount still match the need?

Life moves. A mortgage gets paid down; children become independent; a spouse's pension vests. The amount that was right at 45 may be too much at 65 — or not enough, if you've taken on something new.

Run the calculation again with today's numbers. Being over-insured is a real cost, not a safe default.

6. Does anyone know it exists?

A policy nobody claims pays nobody.

Make sure the person who'd need to act knows the company, roughly the amount, and where the paperwork lives. Not the details — just enough to make the phone call.